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EXPLOSIVE EXPANSION OF VIDEO-ON-DEMAND ADS EXPECTED

Clutter-Free Environment of VOD Programming Lures More Big Marketers

NEW YORK (AdAge.com) -- The first quarter of 2005 is likely to see an explosion of video-on-demand programming projects from mainstream marketers ranging

Scripps Networks, which owns HGTV on Demand, DIY on Demand, Fine Living on Demand and Food Network, has added video-on-demand service to all.

from automaker General Motors Corp. to Kraft Foods.

The growth of digital cable -- Comcast added another 1.1 million digital customers last quarter -- has marketers praising an environment that is clutter-free and that delivers viewers more engaged in shows they've actively selected. Indeed, long-form commercials that mimic TV shows along with other marketer initiatives for VOD programming appear to be eclipsing product placement as the concept du jour.

GM's Lisa Grutta, the interactive marketing manager for GMC, said her division is winding up its first VOD test with Comcast in Philadelphia.

'Take rates' for GM program
Ms. Grutta said Comcast had a host detail the features of an Envoy, and then approached GMC to see if it wanted to air the show on a VOD shopping service called Marketplace. Come September, Comcast will provide "take rates," or the number of people who selected to watch the show. GMC is preparing to work with Discovery Channel's on-demand service, launching in September, and is also working on VOD projects with A&E and the History Channel. "Our target market are light TV viewers interested in technology. VOD is a perfect fit," she said.

Tim Hanlon, senior vice president for emerging contacts at Publicis Groupe's StarcomMediaVest Group, is also working closely with Discovery's imminent on-demand offering. "We'll have a wide array of advertisers involved in that launch, around six to 10."

Agencies are ramping up their capabilities as interest grows.

David Cohen, senior vice president and interactive media director at Interpublic Group of Cos.' Universal McCann, has recently expanded his department's skill set in VOD and wireless technologies.

A lot of 'toe dipping'
"The most interested advertisers are the ones that have the most to lose," he said. "Over the past 12 months we've very much seen toe dipping, now there are trends starting to emerge. By the first quarter of 2005, we will see many iterations" of marketer involvement in VOD.

GM isn't alone in testing the market. BMW is also formulating its plan of attack in the on-demand universe. Bob Flood, executive vice president and director of national electronic media at Publicis Groupe's Optimedia, said BMW's plans were in "development." BMW is working on longer-form commercials, a format that can be easily adapted for use on VOD platforms. Agency executives report Johnson & Johnson and Best Buy are also exploring.

Marketers seek data
Advertisers are keen to avoid some of their investment mistakes in the online world, and are asking for agreements on data points before they commit to VOD projects. Clint Stinchcomb, senior vice president and general manager of Discovery HD Theater and VOD, said marketers "will want to come on board as long as they get data."

Scripps Networks, which owns HGTV on Demand, DIY on Demand, Fine Living on Demand and Food Network on Demand, made VOD part of its upfront discusstions. Jeff Meyer, Scripps senior vice president of interactive sales, is working with GM, Kohler Co. and Kraft Foods. Kohler, for instance, has a treasure trove of footage related to its products that it is looking to translate for use in VOD platforms.